The cement industry, that is suffering from overcapacity in the country, has sought reduction of taxes, including value-added tax (VAT), and liberal export sops in the upcoming budget.

The cement industry has sought reduction of taxes, including value-added tax (VAT), and liberal export sops in the upcoming budget . The industry that is suffering from overcapacity in the country, is hoping to tide over the problem by exporting a part of the production.

In a pre-budget memorandum submitted to the Union finance ministry, industry body Cement Manufacturers' Association (CMA) has proposed slashing VAT from the present 12.5 per cent to four per cent.

This is because steel enjoys 'declared goods' status, while cement and clinker do not. The industry is looking for 'declared goods' status, which would also lower the tax burden on these companies.

"The cement industry has prepared itself to meet the massive needs of this critical input for infrastructure development.

As such we are expecting rationalisation of excise duty structure in the budget in the form of abatement and uniform rate," said N. Bangur, managing director of Shree Cement Ltd.

"The industry has built a capacity that could meet all future needs for the product," Bangur added. Though cement is the most essential infrastructure input, the tax on cement is the highest among infrastructure inputs, at over 60 per cent of the ex-factory price, CMA claimed.

"Levies and taxes on cement in India are far higher than in most other countries in the Asia-Pacific region where the average tax is just 11.4 per cent, with the highest levy of 20 per cent being in Sri Lanka," CMA said in its pre-budget memorandum.

Though India produces cement of international standards it is not competitive on account of the high level of taxes and duties imposed on it.

The Indian cement industry is the second largest in the world and exports to over 30 countries.

To give a fillip to sagging exports, the CMA has sought exemption from import duty on coal, pet coke, gypsum and other inputs from the five per cent imposed currently.

The industry recorded the highest ever capacity addition of 37 million tonnes per annum (mtpa) in 2009-10 to 232.71 million tonnes. This includes capacity of 222.61 million tonnes from large cement plants and mini and white cement plants.